The owner of the troubled Monarch 716 student-housing complex is finding himself on the outs after two Buffalo-based developers kicked him out of the partnership that developed a student dorm across the Genesee River from the University of Rochester campus.
John Yurtchuk of Matrix Development Corp. confirmed that he and David Huck of Regent Development Co. "removed" Thomas Masaschi as a member of the limited-liability company that developed the Riverview Collegiate Apartments.
Masaschi had been a "passive" investor and minority owner, but "he did some stuff with his ownership interest that we thought violated our agreement and the bank's agreement," Yurtchuk said, without going into detail.
Removing him means Masasachi no longer shares any of the profits from the project as one of the owners. So Masaschi has now filed notice in Monroe County Supreme Court that he will sue his former partners, seeking to have his interests restored retroactive to May 23.
Masaschi and his attorney, Jeffrey J. Harradine of Rochester, did not respond to requests for comment.
Yurtchuk said he's not concerned, adding that he had planned to take his own legal action to "state our determination that he forfeited his share."
"In our learned opinion, he played it fast and loose with his ownership interest," Yurtchuk said. "We did expel him and we were going to take proactive action anyway to put that in front of a judge."
Masaschi is one of two partners in Rochester-based DHD Ventures, a commercial real estate developer that has mostly been active in Rochester, but has also broadened to student-housing and other projects in Buffalo, North Carolina, South Carolina, Tennessee and Massachusetts. However, the company has run into trouble more recently, particularly with its student-housing ventures – two of which are now in foreclosure.
In Buffalo, DHD developed the Monarch 716 complex at 100 Forest Ave. on the West Side, with 176 suites and 592 beds largely aimed at Buffalo State College and other nearby schools. The project, which features nine residential buildings and a one-story clubhouse, opened for tenants in late August 2017, but was quickly embroiled in controversy.
DHD and its first property management company, King Residential Group, had touted the benefits and features of what they portrayed as a luxury complex. They sought to fill the complex quickly with discounts and other incentives, while also taking in non-student tenants, so they could show better results to the project's lender.
But some of those tenants proved troublesome for DHD and King. Complaints and even crime mounted, about 100 occupants were evicted and the property's image nose-dived along with its occupancy and revenues.
Meanwhile, contractors and vendors on the project filed more than $3.5 million in liens against DHD for failing to complete payments. And Acres Capital – the administrative agent for three insurance companies that provided the mortgages to DHD – initiated a $38 million foreclosure on the loans that DHD is now contesting.
Another student-housing project – the 576-bed Monarch 815 in Johnson City, Tenn. – is also now in foreclosure on a $31.9 million loan.And a third one, Monarch 544 in Conway, S.C., faces its own challenge, amid sporadic late payments and a drop in occupancy.
Yurtchuk said he and Huck were aware of Masaschi's problems. "He's in all kinds of trouble," Yurtchuk said. "We have similar issues with him... We think he did some things that were wrong."
Riverview Collegiate Apartments is a 506-bed complex that Yurtchuk, Huck and Masaschi built nearly a decade ago for $32 million on land that Masaschi already owned across the river from the university. Since it was his land, Masaschi insisted on staying in the deal, while the other two are the managing members of the partnership, Yurtchuk said.
The entire facility is leased to UR, which rents the rooms to students through its campus housing office. It's reserved for juniors, seniors and graduate students.
"We own it privately, but it's almost like an extension of the campus," Yurtchuk said. "It's off-campus housing, but it has a lot of ties back to the university."
Located along the river at 1236 South Plymouth Ave., the complex originally had 400 student beds, but the developers added another building in the parking lot with 106 more beds two years ago because of the demand, Yurtchuk said. There are now six two- and four-story buildings, with a mixture of two- and four-bedroom furnished and air-conditioned suites.
The property is managed for the university by Buffalo-based Somerset Companies, owned by Brett Fitzpatrick, who is not involved in the ownership.
"We did it in concert with input from UR," Yurtchuk said. "It's a win-win, very positive for them. We paid for it and own it, but we wanted to give them a product they wanted. It's been a great relationship."